With 7,574 users, and over 8,000 destinations, it would seem that SWIFT has got a fairly extensive reach already. But at various Sibos sessions yesterday, industry participants discussed the options that SWIFT has for generating more message growth.
At a panel discussion held in the morning, Bill Rosensweig, SVP at Brown Brothers Harriman outlined his ideas for how SWIFT could grow its traffic. "Reach and the ability to lower the cost of entry for new SWIFT users is the key to SWIFT's growth," he said. "However, I think that SWIFT's existing membership is key to this new growth." He added that his idea was encapsulated by the idea of ‘reaching out by reaching in'.
"We want more use by existing users, not to get more and more end users," he said. "The name of the game is more message traffic, not necessarily new users." He pointed out that 25% of existing SWIFT users did not use the network enough to justify its costs, while 75% of the total traffic was generated by just 1% of the users. The scope for existing members to dramatically increase their usage was great.
He also pointed out the barriers to entry for new users joining the community. One of these is the potential changes in the technology which new users have to commit to if they become SWIFT members.
His solution to this problem was what he called member sponsored connectivity solutions in which existing users share the administrative costs and responsibilities of getting new users into the system.
This idea of using existing users to grow SWIFT was extended by the next panellist, Stephan Zimmermann, a board member of both SWIFT and UBS. Talking about the small number of corporate and insurance company members of SWIFT, he noted that "there is no real market coverage yet," in that area. "The success of the present approach is questionable," he added.
He posited two options for new growth. Firstly he thought the cooperative could evolve the member administered closed user group concept (MA-CUG) into a multi-member CUG. He then went one stage further and said the long term strategy should be for existing members to give access for free to corporates. He did note that this would be politically difficult to achieve, involve complex governance questions, would force changes onto SWIFT and would require some investment from corporates. But ultimately he said he felt this was the right thing to do.
Increased reach would bring the benefits of a network effect to the SWIFT system. As more users use more of the capabilities of SWIFT so the benefits multiply exponentially. "By connecting more counterparties, we can bring savings to the system," said Wim Raymaekers, head of client connectivity at SWIFT. "By attracting more volumes we can lower the message unit cost, which is good news for all of us."